Foreign Relations of the United States, 1952–1954, The American Republics, Volume IV

110.11 AC/7–1452

Résumé of Discussion Held at the Presidential Palace, Rio de Janeiro, July 5, 1952 ¹

confidential

Rio de Janeiro, July 5, 1952

• Participants:
  • His Excellency Getulio Vargas, President of Brazil
  • The Honorable Dean Acheson, Secretary of State of the United States
  • His Excellency Dr. João Neves da Fontoura, Minister of Foreign Affairs of Brazil
  • His Excellency Dr. Horacio Lafer, Minister of Finance of Brazil
• Other Americans Present:
  • Ambassador Herschel V. Johnson
  • Assistant Secretary of State Edward G. Miller
  • Mr. Randolph A. Kidder
  • Mr. William A. Wieland
• Other Brazilians Present:
  • General Aguinaldo Caiado de Castro, Chief of President’s Military Household
  • Dr. Walter Sarmanho, Minister-Counselor, Brazilian Embassy, Washington
  • Dr. Roberto Campos, Brazilian Adviser to Joint Brazil United States Economic Development Commission (translator)

[Here follows a note indicating that the résumé was a reconstruction based on stenographic notes, that President Vargas was reviewing similar notes with the probable intention of making corrections, and that Secretary Acheson had departed from Brazil before having an opportunity to make corrections.]

[Here follows an exchange of amenities.]

Acheson —One very clear and happy impression that I have is the result of my meeting with the Joint Commission yesterday morning.

I am deeply impressed with the profound thoroughness and competence with which that Commission is doing its work.

I am tremendously impressed with the high quality of the advice of the representatives of the Brazilian Government that serve in the Commission.

Mr. President, it seems to me that work of this sort has got to be done in a thorough, vigorous, competent way. It is not something that can be done with just happy enthusiastic ideas. It must be done thoroughly from a rock bottom basis.

I think more harm can be done by unwise and incomplete planning based on enthusiasm. Therefore, it is important that what should be done would be best developed on careful studies, directed toward coordinating public and private initiative.

I have no competence to appraise the specific work of this Joint Commission, but I have had long experience with men and organizations. When I go back to Washington I shall speak to Mr. Black of International Bank and Mr. Gaston of the Export–Import Bank and say that they can have confidence in this Commission; that it is thoroughly and professionally good; they do good work.

My impressions are incomplete since I still have the impression that I will receive in São Paulo. I shall report to the Finance Minister my impressions in São Paulo. He will complete to Your Excellency the résumé of my impressions.

Vargas —President Roosevelt told me once that the United States had the greatest interest in the economic development, and especially in the industrial development of Brazil; because the United States wanted a strong ally, not a weak ally. President Roosevelt believed that the wealthier Brazil becomes the more it would buy from the United States. President Roosevelt did not fear that Brazil would thereby become an industrial competitor of the United States. He felt, rather, that the range of possible interchange would be widened. And this policy I see with satisfaction is being followed by President Truman. An example of this is the operation of Point IV throughout the Latin American countries, beginning with Brazil, which because of its extension and traditional relations with the United States, believes, without being partial, it should really deserve preference in these economic relations.

Some weeks ago I had a talk with Ambassador Johnson and Ambassador Bohan and I manifested my concern over what I considered a delay in the work of the Joint Commission, and commented on the repercussions of this delay on Brazilian public opinion, giving rise to skepticism regarding the efficiency of its labors. I must confess that I realize that since then things have improved considerably; that several projects were concluded by the Joint Commission and duly forwarded to Washington, and that today I am the first to recognize and praise the effort and the competence displayed by the Joint Commission in carrying out its task.

(The President asked Minister João Neves da Fontoura for his comments.)

Fontoura —I have spoken twice with The Secretary of State and I emphasized to him the importance of the internal aspects of Brazilian policy which are bound to reflect inevitably on our foreign policy. And I told His Excellency that our friends in the United States should carefully interpret the character of the election of President Vargas, who was the opposition candidate, elected by the masses and committed, of course, to help meet the needs of the people. I signified that without this notion, many of the Government’s acts could not be understood. I added that the competitors in the election campaign of His Excellency were illustrious, competent and distinguished men. Despite these qualities which they had, it would be extremely difficult for them to face a crisis because they could not count on sufficient popular support to be able to fulfill their promises to the masses, once they were in power. They would not be able to impose sacrifices on the masses to achieve future improvements. I was pleased to hear The Secretary of State, a man of great experience and understanding, say that he considered that no government can subsist at this time if it does not attend to the appeals of the people. He mentioned the New Deal as an example. He also advanced as his personal opinion in this respect, that without doubt, the Democratic Party has a good chance to win the elections, because it has always sought to meet the needs of the people.

The last consideration I wish to add is that the present conduct of our foreign policy stems straight from directives given by President Vargas when he was still a candidate, and subsequently President-elect. I am now trying to implement his policy in the foreign field.

This was the policy I took as Delegate in the Fourth Consultative Meeting of Foreign Ministers in Washington.² Furthermore, when the Secretary of State presented the project of the Washington Declaration,³ I did not sign it without express consultation by telephone with President Vargas, even though I did not believe that it contained any policy innovations. Our policy of cooperation with you is the same now as it was under President Vargas’ previous Government. But new problems have emerged under Getulio’s new Government, and although the policy is the same, the nature of these problems requires some adaptation.

Today when the Secretary of State was saying goodbye to me, I told him that he knows Brazil, has seen Brazil, and was able to see that everywhere he had a very cordial reception. He has talked with public officials, Members of Congress and the people. He saw that this cordiality was spontaneous; that it could not be enforced on all classes of the people by a democratic government. The government reflects public opinion, and this proves the sincerity of the feeling of cooperation demonstrated by our administration.

(The President invited Minister of Finance Horacio Lafer to present his comments on economic problems, asking him to include an expression of his views on the degree of success achieved by the Joint Commission.)

Lafer —Mr. Secretary, a Finance Minister always has things to request. But I ask you not to be frightened because the President told me to behave myself as much as possible.

The Brazilian situation may be characterized as President Vargas defined it—a crisis of growth. And this crisis has brought a perilous result which is the excessive rise in the cost of living for our people. This rise had two causes: one of a monetary nature; the other resulting from lack of production. President Vargas, despite obstacles, with enormous sacrifices, struggling against all the States, political parties and friends, is determined to curb the monetary cause by achieving a balanced budget. Brazil is today in a regime of budget balancing, not spending more than its possibilities, not granting speculative credits, and avoiding everything which for monetary reasons may afflict the Brazilian people by causing a rise in their cost of living.

The second cause is lack of production. That in turn has one chief origin, the lack of transportation—land and sea, lack of silos and warehouses. We are losing in Brazil around 25 or 30 per cent of the food yearly produced due to lack of transportation. Last year we had the paradox of being obliged to import potatoes from Holland when we had loads of potatoes produced in Paranã which could not be used, and which rotted for lack of transportation.

It was because of this that President Vargas, when sending me to Washington last year, gave me instructions to present a plan, based on the Joint Commission’s studies, and according to which Brazil would contribute 50 per cent of the financing required, in cruzeiros, to meet those needs, while requesting credit in foreign currency for the importation of indispensable equipment and materials. President Vargas thus wanted to show that Brazil does not want only to request help but also to contribute and to work on the principle of self-help.

The President has aked my opinion on the work developed by the Joint Commission. I must say that the work so far done by the Joint Commission, and the work still to be performed, if the necessary support is forthcoming, as I am certain it will be, because it was nobly and understandingly promised in the document which has the honor to have the signature of Mr. Acheson in Washington last year, will represent the guarantee of Brazilian social stability. And, in my opinion, it will contribute the best basis for a stronger friendship between Brazil and the United States.

Only one small point I would like to ask Secretary Acheson, and ask also President Vargas and Dr. Joao Neves da Fontoura because all of them are friends of Mr. Black. This is that Mr. Black set up an organization that will make possible more expeditious action on the studies presented to the International Bank by the Joint Commission. As Mr. Acheson said, the projects which leave here for the International Bank represent a careful, accurate and perfect study. So, this study alone should constitute a reliable base for a rapid decision.

I beg to go from a general point of view to slip in a point more particular in nature, but very important. Brazil, as Mr. Acheson said in his admirable speech,⁴ has a tremendously big coast. Food and other goods we have to transport from south to north and from north to south. Our merchant marine fleet is worn out and inadequate. When last year we had the drought which greatly harmed the Northeast, we had great difficulty in getting rice and beans in the South to send urgently to those people who were suffering hunger. Our ships are worn out and obsolete. If it were possible for the Secretary to use his high influence to enable Brazil to purchase or lease ships of the mothball fleet it would be a great thing for the urgent solution of this problem. It would be an enormous help to Brazilian economy. We would prefer 20 small ships today to 200 “Queen Marys” 100 years from now. Our coastwise transportation problem is really of the greatest urgency. But trans-ocean shipping must also be developed. It is not the impossibility of getting shipping space, but the high foreign exchange expenditures for freight. Of course we have ships of other countries available but we must expend almost 200 million dollars a year for their shipping services. If we could save a part of these dollars by carrying our shipments in our own ships we could save money with which to buy machinery and other goods which Brazil really needs, including equipment and materials to develop agriculture.

Another point, which is more by way of explanation: it refers to the basic product of Brazil—coffee. Mr. Acheson should know and understand that Brazil does not wish excessive prices for coffee; but coffee is our main currency for paying for our imports; and if we do not have a price for coffee on the same level as that we pay for imported merchandise, the sacrifice will be tremendous for Brazilian economy and for our imports, which would have to be curtailed. Therefore, it is within this criterion that we wish the American Government to regard all the problems related to coffee, since in the past and still today coffee is the basis of Brazilian economic stability.

Unless the President has other instructions, those are the comments that I would like to make at this stage. I wish to conclude by saying that Mr. Acheson has conquered the hearts of all Brazilians, (smiling) and what is more alarming including those of the Brazilian women.

Vargas —I wish to second the appeal made by the Finance Minister with relation to ships, of which Brazil has at present a great need. Brazil has 6,500 kilometers of sea coast. One-third of its merchant marine fleet was destroyed by submarines during the last war. Some of the German ships that we had taken over were ceded to the United States during the war. Today our merchant marine, one can say, is falling to pieces. It is in constant need of repairs to such an extent that it is naturally impossible to cover operating costs from receipts. Very soon many of them will be laid aside because they are unserviceable. Under these conditions I appeal to the Secretary, as the representative of President Truman, that through sale or lease we be granted some ships. This matter is now being studied by the Joint Commission, but as it depends essentially on the goodwill and understanding of the American Government, I make this appeal now to avoid further delay of a solution. I shall work on this matter and prepare a memorandum for the examination of the Joint Commission for it to submit to Washington as soon as it has worked on it.

I must mention that Brazil is the second largest market in the world for United States goods. It is surpassed only by Canada. This was the appeal that I had to make, recalling an old saying here in Brazil “Os negócios claros conservam a amizade”. (Interpreter’s translation: “Clear and straight business preserves friendship”. The word “straight” was added by the interpreter.)

I wish to add that we are taking steps to improve our port situation. Dredging operations have been contracted for, and administrative measures are being taken to facilitate loading and unloading of ships, in order to reduce time of stay at ports.

The ports will soon be cleared and have empty berths, ready for the new ships to come.

And further, I wish to reiterate my thanks for the honor of the visit of The Secretary of State, expressing the hope that from what he has been able to see and observe he takes with him a good impression, and I sincerely hope that he will defend our interests and aspirations upon his return.

Acheson —I wish to make one or two comments, (Two or three sentences unheard.) Within a few days after the President’s election as President of Brazil, some of your trusted advisers were working with us, on the plans which resulted in the operation of the Joint Commission. Only two or three days ago a loan was announced by the International Bank for hydro-electric power in the State of Rio Grande do Sul. This is very important for the economic development of Brazil. This is still a young administration; it has not gone very far, but fruits have already been harvested. The work of the Commission, of course, had help from the bankers. The projects submitted to the consideration of the banks might be compared to Rio traffic. When you have motorcycle escorts to get obstacles out of the way, you move very fast. But when there are traffic jams, all the horns start blowing and no one makes any progress. Work in banks is no different. On my return, I will request that the banks expedite your matters.

The matter of shipping that the Minister of Finance spoke about presents a very difficult problem for President Truman, because he does not have legislative authority to transfer these ships. This calls for legislation which is difficult to obtain under any circumstances and especially now that Congress is on vacation. Also because this is an election year, and two very powerful groups that are interested are the shipping companies and the Maritime Commission. It is almost impossible to touch on this problem.

This question is being examined and will continue to be examined carefully. It may be found advisable to consider a possible alternative which might be assistance from the United States to enable Brazil to repair and construct its ships for coastwise navigation. Both of these things might be studied carefully. The solution will not be possible, until Congress opens, and this will be a matter to be decided next year when President Truman will not be there and I will no longer be the Secretary of State. All I can do is to indicate the problem and have some recommendations to make.

Mr. President, there are some matters which are of interest to my government, which I know are being given careful consideration by the Brazilian Government. I do not wish to discuss these matters but merely to mention them. At this moment they are being studied by the Minister of Foreign Affairs, by the Minister of Finance or other Government Departments. I do not wish to request any specific decision, but only that there be some decision. I know that whatever decision is reached will be a reasonable and wise one. Some of these problems relate to strategic materials. I know the problem is a difficult one for you, but I hope we can reach a conclusion. There are also problems related to the question of shipping. Some time ago we discussed with your military advisers participation of Brazil in Korea. If you could consider it, it would be very helpful. (One brief remark unheard.)

I should like to mention a matter in very great confidence. It may be of significance or it may not. I wish to inform you that within the last two or three days there has been a marked change in the attitude of the communists during the negotiation for exchange of prisoners. I give you this information in confidence.

We have had these changes in the past. Sometimes they are important, at others without significance, just means of propaganda. This time it may be significant. I do not allow myself to be too optimistic. But there has been a change in the last days, and more of a desire to discuss exchange of prisoners—and this gives me some hope.

The reason I mention this is because it will have a great effect on the international situation if there is an armistice in Korea. We may get some idea of the effect of this if we consider one or two facts about our own effort in Korea.

For instance the supplies we are sending to the front in Korea engage more shipping than the highest volume shipped at any time during the war with Japan. This will give you some idea of the transportation problem confronting the Trans-Siberian Railway. Another fact which is of importance here is the expenditure of ammunition per division on the front; it is six times greater than ever was reached during the last world war. You see this struggle imposes such stress on United States economy, we can get some idea of the strain on Soviet economy. So you can see why this development in the struggle in Korea becomes significant. It is this fact more than any change in attitude on prisoners that leads me to have some hope. If the fighting in Korea stops, we will not have come to the end of the Soviet effort. Only the military phase would be ended, and the new phase of infiltration will begin. The matter will come before the Fall Assembly of the United Nations when the Far East question will be discussed. I shall then see Minister Neves da Fontoura at the General Assembly and I will have the opportunity to discuss matters with him for common guidance. We will have to consider together very carefully and treat the problem coolly and realistically.

Political stability in the Far East will create conditions of stability which … (some remarks missed). I thought it was important to lay this situation before you because we must be the ones to bring coolness and wisdom to consideration of the Far East. Some of our colleagues are very enthusiastic. We must be the ones to cool them off. Dr. Neves da Fontoura knows the people I have referred to.

Fontoura —(Smiling) I know them well.

Acheson —Mr. President, these are the only observations I had to make and I want to thank you for the close and intimate consultation which you let me have with you and your great advisers.

Vargas —Consideration is being given to Brazilian interests in the Joint Commission and among those interests is the question of shipping. Maybe the Commission will find a solution for this very pressing problem. I understand legislative difficulties, but I was not aware that they existed. Perhaps I will find a solution. I regret that President Truman is not again a candidate, as the Constitution of his country permits. Perhaps this would have made things easier.

We took into consideration what the Secretary mentioned with regard to the international situation. Several commissions, civil and military are studying the various problems of common interest. On the part of Brazil every effort will be made to overcome difficulties in the treatment of those problems provided Brazil’s ability to maintain the social order is not impaired. Brazil is studying the responsibilities that it must undertake in the international situation. They should be proportionate to the authority which may be recognized to Brazil in international decisions, the means that will be assured to it, and account must be taken of the time indispensable for its preparation for the fulfillment of such commitments.

I thank you and everybody present for the success of the conversation.

1. Transmitted to the Department of State under cover of despatch 48, from Rio de Janeiro, dated July 14, 1952 (1 10.11 AC/7–1452).

   A reconstruction of the conversation prepared by the Brazilian Government, together with a translation containing footnotes indicating differences between the two versions prepared by the Embassy, was transmitted to the Department of State under cover of despatch 334, dated Aug. 26, 1952, not printed (110.11 AC/8–2652).

2. For documentation on the meeting, held Mar. 26–Apr. 7, 1951, see Foreign Relations, 1951, vol. ii, pp. 925 ff.
3. For text, see Fourth Meeting of Consultation of Ministers of Foreign Affairs: Proceedings (Washington, 1951), pp. 236–237.
4. Reference is to the speech made at a banquet in the Secretary’s honor given by Brazilian Foreign Minister Neves da Fontoura, at Itamaraty Palace, Rio de Janeiro on July 3, 1952; for text, see Department of State Bulletin, July 14, 1952, pp. 47–51.